South Carolina Personal Lines Practice Exam

HO-5 provides coverage for dwelling and personal property on a _______ peril basis.

1. Broad

2. Specific

3. Open

4. Basic

The correct answer is: Open

The HO-5 policy form provides coverage for dwelling and personal property on an open peril basis. This means that it covers all risks of physical loss or damage, except for those risks that are specifically excluded in the policy. The open peril approach offers a higher level of protection for the insured, as it does not limit coverage to a pre-defined list of specific perils but rather provides coverage against a wider array of potential threats. In contrast, policies structured around specific perils would only provide coverage for risks that are explicitly listed in the policy. Broad and basic peril forms also operate under similar limitations where they outline specific covered perils. Thus, the open peril coverage of the HO-5 enhances the flexibility and comprehensiveness of the insurance policy for both dwelling and personal property, making it a preferred choice for many homeowners.